Ongoing Patent Fights Mean Startups Are Now Wasting What Little Money They Have At The Patent Office

from the not-cool dept

Last week, I had the chance to chat with the General Counsel of a well known internet company -- not a "giant" one, but one you've almost certainly heard of -- and we got to discussing Twitter's new patent assignment agreement with its employees, and whether or not other tech companies would start offering the same thing. He was a bit skeptical, and pointed out that, even at a company the size of his (big enough to have a full time general counsel, for example) they had applied for exactly zero patents. He said he's tried, but none of the engineers at the company have any interest at all in patenting what they're working on (actually, in talking to someone else later on, I heard that the bigger issue is that some of the employees are thinking about ways to open source their work). Either way, the lawyer noted that, because of that, any patent assignment agreement was something of a waste of time. His company just wasn't interested.

This is, to put it mildly, crazy. The two biggest scarce resources for startups are time and money. Throwing them away on getting patents is a huge waste, and it's main purpose is to act as insurance against failure or against jealousy over extreme success. Basically, most patents are completely useless. But if a company is failing, then perhaps it can sell off its patents. And, if a company is succeeding, then suddenly others will start suing it for patent infringement -- and the hope (rarely realized) is that having at least a few patents in the portfolio means that other practicing entities won't sue for fear of getting sued back (patent trolls are exempt from this, however).

It's really too bad that the state of the patent world today is such that are most innovative companies are basically forced to throw away time and money to apply for patents they never want to use.

One separate aside on this story. The article talks about the Twitter IPA agreement, and later quotes the founders of the startup Everyme as saying they support the IPA, but: "their first three apps were already with the U.S. Patent and Trademark Office by the time IPA was available, though, and they don’t plan to refile them." This sentence makes no sense. The IPA has nothing to do with the USPTO and the patent filing. It's merely a part of the assignment agreement, leaving some portion of control with the inventor. In fact, Twitter -- who does have some patents -- has said that it's using this agreement retroactively with patents that were applied for before the IPA existed. So there's no reason to refile the applications at all. In fact, the IPA is entirely separate from the actual patent application.

Business

I've been sitting here, thinking about the business world as it currently exists, and wondering how we should fix it. This mess reminds me of the conditions that existed on my Kindergarten playground, 64 years ago. The same sort of friends, quiet studious types, bullies, gangs protecting property (toys) they perceive as theirs, faculty, etc. I can see little difference except now they're playing for real stakes and money. Maybe we should just spank them, or give them "time out" in the corner.

Re: Business

Our time-out corners are already overcrowded enough as it is without adding bureaucrats and corrupt businessmen to them, and spanking wouldn't work because all the lawyers we'd be punishing would probably be able to find a way to have it labeled cruel and unusual. The best option looks to be taking away their toys until they learn to play nicely.

What if we also eliminated business structure?

Could we push this to an extra level and begin to open source businesses in general? Do we really need businesses as an entity? Can we design systems so that startups become less important and everything that anyone wants to do can be developed as an open source project?

Re: What if we also eliminated business structure?

Re: Re: What if we also eliminated business structure?

Thanks for the link. Yes, definitely, and so much more. What if there wasn't a Facebook going for an IPO? What if we evolved away from corporations altogether and eventually everything was open-sourced?

I'm not saying it could happen, or even if it could, that it would happen immediately. But I think we are in the midst of a change as significant as the Industrial Revolution and perhaps our economic models will evolve accordingly.

Patents anyway?

What I don't understand is how some patents make it to validity. FOr example, Larry Niven in "The Integral Trees", in 1984 describes finger gestures on a flat screen to control a device. Make a pinching motion on the flatscreen over the door icon on the diagram of the ship,and the door closes. After that sort of "prior art" publication, in what way can ANY future manufacturer claim a patent on finger gestures on touchscreens? 1984!! yet, people are still going to court over touchscreen gesture patents...

It's because...

We are churning out lawyers at a rate that almost every job in 100 years will be in the legal profession. I heard 1 of 10 in California are lawyers already, which might account for how they turned out.

We no longer produce or innovate... we sit around and sue each other. It appears to be highly profitable... at least for the lawyers. We need tort reform where losing party pays. That would help out trememdously with the health care industry and the patent system.

Re: It's because...

We no longer produce or innovate... we sit around and sue each other.

I would also toss in Wall Street. Some of the best and brightest in the country have gone into an industry that is nothing more than pushing numbers around. It's gambling and con games rather than real wealth creation.

monetization vs. trolling

Startups are often better off devoting their energy to improving their products and market performance than on patent acquisition. That said, however, innovators may as well face the fact that patent monetization is an increasingly strong and prevalent business model that is not just limited to "patent trolls." And, by the way, since Intellectual Ventures wholeheartedly entered the patent litigation game, I no longer believe anyone -- not even Twitter -- who claims to be amassing patents for "defensive purposes only." The siren song of profit is too hard to resist for very long.